Zabrina has started her own company, Lockey, which manufactures imprinted jeans. Since he just begun this operation, he rents the equipment from a local printing shop when necessary. The cost of using the equipment is P3,000. The materials used in one jean cost P200, and he can sell it at 350. Requirements: Provide for a mathematical model that will show how to maximize the profit
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Zabrina has started her own company, Lockey, which manufactures imprinted jeans. Since he just begun this operation, he rents the equipment from a local printing shop when necessary. The cost of using the equipment is P3,000. The materials used in one jean cost P200, and he can sell it at 350.
Requirements:
- Provide for a mathematical model that will show how to maximize the profit.
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- Lutfi was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Lutfi any financial aid. Lutfi values attending Elite U at $60,000 per year. Public College costs $30,000 per year, and offered Lutfi an annual $10,000 scholarship. Lutfi values attending Public College at $40,000 per year. NoName U costs $20,000 per year, and offered Lutfi a full $20,000 annual scholarship. Lutfi values attending NoName at $15,000 per year. 24. Based on the information above, the opportunity cost of attending Elite U is?A local restaurateur who had been running a profitable business for many years, recently purchased a three-way liquor license. This on-premise license gives the owner the legal right to sell beer, wine, and spirits in her restaurant. The cost of obtaining the three-way license was about $90,000, since only 300 such licenses are issued by the state. While the license is transferable, only $75,000 is refundable if the owner chooses not to use the license. After selling alcoholic beverages for about one year, the restaurateur came to the realization that she was losing dining customers and that her profitable restaurant was turning into a noisy, unprofitable bar. Subsequently, she spent about $8,000 placing advertisements in various newspapers and restaurant magazines across the state offering to sell the license for $80,000. After a long wait, she finally received one offer to purchase her license for $77,000. a) Would you recommend that she accept the $77,000 offer? b) The restaurateur…Your client, InsureCorp, is an insurance company considering launching an ‘income insurance’ product in the island nation of Autarka. Income insurance is a product that fully insures a household against changes in income caused by a major injury or illness. At present, no businesses are selling income insurance products in Autarka. Initial market research suggests that there are 10,000 households in Autarka interested in purchasing income insurance. Your client expects that the fixed cost of launching the income insurance product will be $20,000,000 per year, and that each policy issued to a customer will cost the company an additional $1,500 in sales commissions. What is the maximum price the company can charge a household for an income insurance policy? What is the expected profit (or loss) for the company if it becomes a monopoly provider of income insurance? Is there a risk that rival insurance companies will also enter the market, selling identical income insurance products? If…
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- A nationwide real estate corporation is considering adding a new service line to sell the house of a client that buys another house through one of their agencies. It has determined that the first cost would be $80 million cash available for full implementation. However, John, the corporate vice president of sales, is not sure how well the service will be received, so he has projected added revenues using optimistic, most likely, and pessimistic estimates of $35 million, $25 million, and $10 million, respectively, with equal probability for each. Instead of expanding now, the company could implement a pilot program for 1 year in a limited geographic area that will cost $4 million now. (The full-scale service will still cost $80 million if implemented later.) This will provide the company with the option to move forward or cancel the project. The criterion identified to move ahead with full-scale implementation is that added revenues during the pilot program must exceed $900,000. In this…Your company is contemplating bidding on an RFP (Request For Proposal) to produce 100,000 units of a specialized part. Suppose, however, that the requesting company really needs only 90,000 units of the part. Also assume that, because the part is specialized, potential suppliers do not yet possess the machines and factories needed to produce it and that overhead expenses involved in production have yet to be incurred. Suppose the average costs of all potential suppliers are as follows: Units Average Total Cost (Dollars Per Unit) 90,000 4 100,000 3 True or False: The requesting company can solicit lower bids by requesting 100,000 units as opposed to 90,000.A provincial park issues three different types of passes to its customers (bronze, silver, and gold tickets). Each pass type allows visitors to spend different times in the park and have access to different park amenities. The profit margins of the three pass types are $1.00, $3.50, and $12.00 per pass, respectively. The administrative working units required for the three pass types are estimated to be 1, 1, and 4 units, respectively. The monthly administrative working units available are 25000 units. In a typical summer month, the number of visitors was estimated to be 10,000 visitors. Accordingly, the park management decided to issue a total of 10,000 tickets for that month. Based on preliminary market research, the park management also decided to make at least 1500 bronze and 1500 silver passes available for customers. Based on this information, what is the optimal number of each pass type that the park should issue to maximize its profit? Use the simplex method to develop your…
- A local restaurateur who had been running a profitable business for many years recently purchased a three-way liquor license. This license gives the owner the legal right to sell beer, wine, and spirits in her restaurant. The cost of obtaining the three-way license was about $90,000, since only 300 such licenses are issued by the state. While the license is transferable, only $75,000 is refundable if the owner chooses not to use the license. After selling alcoholic beverages for about one year, the restaurateur came to the realization that she was losing dinner customers and that her profitable restaurant was turning into a noisy, unprofitable bar. Subsequently, she spent about $8,000 placing advertisements in various newspapers and restaurant magazines across the state offering to sell the license for $80,000. After a long wait, she finally received one offer to purchase her license for $77,000. What is your opinion of the restaurateur’s decisions? Would you recommend that she accept…The Craine Company manufactures three products, which require three resources – labour, materials, and administration. The unit profits on these products are $10, $6, and $4 respectively. There are 100 hr of labour, 600 lb of material, and 300 hr of administrations available per day. In order to determine the optimal product mix, the following LP model is formulated and solved: Maximize Z =10 x 1 +6 x 2 +4 x 3 Subject to x1+x2+x3 ≤100 labour 10x1+4x2+5x3 ≤600 material 2x1+2x2+6x3 ≤300 administration x1+x2+x3 ≥0 Where x1,x2, and x3are the daily production levels of products 1, 2, and 3 respectively. A computer output of the solution given below: Optimal Solution: x1 = 33.33, x2 = 66.67, x3 = 0 Optimal Value: Maximum profit = $733.33 Shadow Prices: For row 1 = $3.33, for row 2 = 0.67, for row 3 = 0 Opportunity Costs For x1 = 0, for x2 = 0, for x3 = 2.67 Ranges on Objective Function Coefficients Row…You have been hired as an economic consultant to assess the feasibility of building a new hockey arena in the city of Saskatoon. The demand curve for attendance at the new arena per game is given by P = 100 – 0.005Q and average attendance per game (35 home games) is optimistically forecast to be 12,000; the demand curve for other entertainment goods which are thought to be substitutes for basketball games is given by P = 1500 – 0.01Q and an estimated total of 100,000 tickets per year are sold for these events. Per capita income in Saskatoon is currently estimated to be $40,000 per year, which is forecast to rise to $40,100 after stadium construction is completed (local population = 600,000). The income multiplier is thought to be 1.2. Construction costs for the new arena are budgeted to total $175 million with annual arena maintenance costs of $5 million. The city will pay for the annual maintenance costs for the first three years of arena operations. The market rate of interest is 2%.…